Coty is heading into a make-or-break transition year. With sales and profits falling, the Gucci Beauty license on its way out and its consumer beauty brands struggling for relevance, the company is betting that its turnaround plan can restore growth. But analysts say the challenge goes beyond cutting costs: Coty needs to make its brands desirable again. The scale of that challenge became clearer with its latest results. Like-for-like revenues fell one per cent to US$1.3 billion in the fourth qua
quarter and five per cent to US$5.8 billion for the full year, while fourth-quarter adjusted EBITDA declined 26 per cent to US$93.6 million. The margin contracted 270 basis points to 7.4 per cent.
Investors were not reassured. Coty’s shares dipped 7 per cent in after-hours trading after the August 19 results, with the company also withholding its 2027 outlook.
Markus Strobel, Coty’s executive chairman and interim CEO, said the latest results provided “early signs of stabilisation”, but cautioned that “the recovery will not be linear”.
One complication is the exit of the Gucci Beauty license, which Strobel attributed as a factor in Coty’s sales decline and which will result in a further step-down in sales and profit in fiscal 2028.
Coty is already preparing for that impact. Its plans include accelerating core brands, maximising contributions from new portfolio additions – makeup under Marc Jacobs Beauty and fragrances under Swarovski, Etro and Marni – and lowering its cost structure through a significant fixed-cost reduction program.
Strobel described FY27 as a “transition year” in which Coty would strengthen its core business and become a simpler, more focused company. Alongside preparing for the Gucci exit, Coty expects to make final decisions on its strategic review of Consumer Beauty by the end of 2026.
“We have important strengths to build on, including leading brands, strong category positions, solid cash generation, and a differentiated end-to-end global platform,” Strobel said.
He said Coty was confident the Coty.Curated turnaround plan would unlock the company’s potential and translate into shareholder value in the years ahead.
Can Coty turn things around during its “transition” year?
Retail analysts agree that Coty has its work cut out in the year ahead.
Neil Saunders, GlobalData’s managing director, told Inside Retail that “amid a resilient beauty market, Coty’s latest results are soft”, adding that while weakness could be expected during a turnaround, the company needed a clear path back to strong growth.
That task will become harder once the Gucci license is handed back, he said, putting further pressure on Coty’s numbers and making growth from its remaining brands increasingly important.
Saunders said that would require new brand partnerships, more must-have luxury products and a revamped mass-market portfolio.
“That’s a lot of work for Coty to undertake,” he said.
Barney Stacher, CEO of consultancy Retail OCD, was similarly sceptical about the year ahead.
“Calling 2027 a transition year may buy Coty time, but it will not buy relevance,” he said. “Consumers do that.”
For Stacher, Coty needs fewer incremental launches and more genuine product heat. Boosting profitability will require the beauty conglomerate to rev up its approach to innovation and storytelling, while creating experiences compelling enough to move shoppers from discovery to purchase.
The company also needs to confront the sharper decline in consumer beauty, he said.
“It must also address the sharper decline in the consumer beauty category. Brands such as CoverGirl, Rimmel and Max Factor need clearer identities and greater cultural relevance. If Coty cannot articulate why each brand matters to today’s shopper, cost-cutting and portfolio simplification will not be enough.”
AI-powered technology could also help revive Coty’s approach to product development, Stacher suggested, by giving the company a deeper understanding of retailer data and real-time consumer signals.
“Ultimately, the success of ‘Coty.Curated’, a strategic turnaround and growth framework launched this February, will depend on whether consumers see stronger, more desirable brands, not simply whether investors see a leaner company.”
Kimber Maderazzo, professor of marketing at Pepperdine Graziadio Business School and a beauty industry expert, sees opportunities for Coty despite its challenges.
“Fragrance remains a bright spot in beauty, including for Coty,” she said, arguing that the company should build on that momentum through meaningful innovation, new formats and products that can attract younger consumers to its fragrance franchises.
Beyond product development, Maderazzo said Coty needs to make its strongest brands more visible in the channels where consumers are shopping and invest in marketing that creates excitement and cultural relevance.
“Beauty demand remains resilient, but consumers are increasingly selective, which means simply being on the shelf is no longer enough.”
That selectivity should also extend to Coty’s own spending during the transition, according to Maderazzo. Rather than supporting every brand equally or relying on promotions to generate short-term volume, she recommended concentrating resources on fewer brands with the greatest potential for growth.
That would mean building a stronger innovation pipeline, responding faster to emerging beauty trends, targeting consumer acquisition and expanding into channels and markets where those brands can gain share.
“A transition year does not have to be a lost year,” Maderazzo said. “Coty can use 2027 to demonstrate that the portfolio it is building can generate stronger, more sustainable organic growth.”
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